Thursday, February 26, 2009

The Detroit Crisis - Then and Now

When a steep recession struck the United States 50 years ago, automakers were caught unaware. Car sales plunged in 1958, and the national unemployment rate was 6.8 percent. At a time when Americans were tightening their belts and looking for practical, economical automobiles, all Detroit had to offer were pricey, ostentatious behemoths.

That may sound similar to Detroit’s situation today. Yet the seeds of the Big Three’s current problems were laid in the late 1950s, when the lack of small American cars opened the door to the first large wave of imports, particularly the Volkswagen Beetle.

There was a reason, though, that the Big Three had failed to produce small cars before the 1958-59 recession. A decade earlier, smaller American automakers had tried, and largely failed, to make successful compacts.

Nash seemed to be the only American manufacturer to get the compact formula right. The styling of its Rambler was fresh, distinctive and attractive. But the most important factor that contributed to the original Rambler’s run in 1950-55 was that there was a full line of Ramblers in many body styles. At the side, a 1952 Rambler convertible.

Photo: From the brochure collection of Steve Hayes

The generally accepted explanation for the failure of these Detroit compacts is that nobody cared about fuel economy or small cars.

But they also failed because they had the bad luck of being produced by chronically undercapitalized independent automakers. These compacts were not particularly thrifty, had no distinctive engineering features and rather than being stylish but sensible, they were simply cheap and frumpy. Not surprisingly, they failed to entice Americans. Detroit’s abandonment of the entry-level car market to foreign makes started in the early 1950s.

But they also failed because they had the bad luck of being produced by chronically undercapitalized independent automakers. These compacts were not particularly thrifty, had no distinctive engineering features and rather than being stylish but sensible, they were simply cheap and frumpy. Not surprisingly, they failed to entice Americans. Detroit’s abandonment of the entry-level car market to foreign makes started in the early 1950s.

Manufacturers like Kaiser, Hudson and Chrysler, were in the market offering compact cars, but it’s the Metropolitan by Nash that has the largest following. “Women especially just go nuts for them,”